Peoples Bancorp surges on earnings beat, upbeat 2026 outlook
Regional bank improves credit quality, redeems high-cost debt, raises fee income guidance
Peoples Bancorp shares climbed in Tuesday morning trading after the regional bank reported fourth-quarter earnings that exceeded analyst expectations, alongside improved credit quality and positive guidance for 2026.
The Marietta, Ohio-based financial services company reported diluted earnings per share of $0.89 for the quarter ended December 31, 2025, surpassing consensus estimates by 8.5 percent. Net income for the quarter reached $31.8 million, according to regulatory filings.
The stock rose 2.85 percent in pre-market trading to $32.10 per share following the announcement. The company's market capitalization stands at approximately $1.12 billion, with shares currently trading at 10.5 times trailing earnings, a discount to the analyst target price of $34.33.
"We achieved our expected results for the full year 2025, generating positive operating leverage and achieving 6 percent loan growth compared to 2024," said Tyler Wilcox, President and CEO of Peoples Bancorp, during the earnings call on January 20.
Credit quality metrics showed meaningful improvement during the quarter. Criticized loans decreased by $31.9 million, while classified loans declined by $11.4 million from the previous quarter, primarily driven by loan paydowns and upgrades. Non-performing assets also decreased following the sale of an other real estate owned property during the fourth quarter.
The bank's criticized loan ratio improved to 3.5 percent of total loans at year-end, down from 3.99 percent at September 30, 2025. Similarly, classified loans as a percentage of total loans declined to 2.18 percent from 2.36 percent in the linked quarter.
In a strategic move to reduce funding costs, the company redeemed subordinated debt carrying an interest rate of approximately 8.5 percent. The redemption resulted in a one-time loss of nearly $0.8 million during the quarter, negatively impacting diluted EPS by $0.02. However, management anticipates annual savings of approximately $1 million going forward from the debt restructuring.
Looking ahead to 2026, Peoples Bancorp provided guidance that caught investors' attention. The company projects its net interest margin to range between 4 percent and 4.2 percent for the full year, factoring in 125 basis points of anticipated interest rate cuts. Loan growth is expected to come in between 3 percent and 5 percent, consistent with prior management commentary.
The bank raised its fee-based income guidance to $28 million to $30 million per quarter for 2026, up from previous levels. Tangible book value grew 3 percent during the quarter to reach $22.77 per share.
Analysts noted that the quarter's results were supported by strong commercial and construction loan growth, firmer fee income, and stable asset quality. Leadership attributed these gains to heightened demand from middle-market clients, particularly in commercial and industrial sectors, alongside ongoing improvements in the company's small ticket leasing portfolio.
"Loan growth reached the upper end of internal targets despite continued paydowns and a strategic reduction in riskier leases," Mr. Wilcox told analysts during the question-and-answer session, which included Brendan Nosal from Hovde Group and Jeff Rulas from D.A. Davidson.
CFO Katie Bailey pointed to steady efficiency ratios and growth in tangible equity during the call, while acknowledging that leasing-related charge-offs remained elevated as anticipated.
For the full year 2025, Peoples Bancorp reported net income of $119.8 million, with quarterly earnings growth year-over-year of 17.1 percent. The company's profit margin stands at 25.6 percent, with a return on equity of 9.21 percent.
The bank continues to pay a quarterly dividend, with the most recent dividend of $0.41 per share yielding approximately 5.0 percent at current price levels. Institutional investors hold 61.1 percent of outstanding shares.
As regional banks continue navigating a challenging interest rate environment, Peoples Bancorp's combination of improving credit quality, strategic debt management, and positive operating leverage has positioned the company for what analysts describe as a potentially undervalued opportunity in the banking sector.